Editor's note: Horry County Government issued a news release about the hospitality fee settlement late Friday afternoon. This story has been updated with information from that release.
None of the $19 million in the proposed Horry County hospitality fee settlement would pay for attorney fees in the case, but nearly 25% of that amount is expected to go to an organization that funds nonprofit legal services in the state, according to records obtained by myhorrynews.com.
The documents show a breakdown of the proposed settlement, which was approved by the county and Grand Strand municipalities this month.
Finalizing the settlement — which is scheduled to go before a judge on Tuesday — would end the nearly two-year saga over the 1.5% levy on restaurant meals, hotel stays and admission tickets that the county has collected since the 1990s.
The fee was created to pay for road projects such as S.C. 22 and S.C. 31. In 2017, county leaders voted to extend the life of the hospitality fee indefinitely. They hoped the revenues would help pay for I-73, a proposed interstate linking the Grand Strand with I-95. However, county officials also planned to use some of that money for public safety services, and that move upset city officials; they didn’t want fees collected in their borders paying for county services.
The county was forced to stop charging the levy inside city limits in 2019 after Myrtle Beach filed a lawsuit alleging the county should not be collecting that money without the city’s consent. Other municipalities in the county sided with Myrtle Beach.
Under the proposed agreement, the county would resume collecting the fee inside the cities. But instead of keeping that money, the county would return to the municipalities the portion collected from inside their borders. Tax and fee levels countywide would go back to the way they were before the litigation.
Although the hospitality fee revenues would not go to I-73, the parties have agreed to work together on a separate funding plan for the proposed interstate and other road projects in the county.
The new terms are nearly identical to the settlement agreement the parties reached last year. However, the S.C. Supreme Court rejected that deal because the county and the city left one question unanswered: What should be done with the $19 million that was collected between the time the roads funded by the original fee were paid off and the moment a judge forced the county to stop collecting the fees inside the city limits?
The two sides disagreed over how that money should be distributed. The county wanted all the funding to go to the cities while the cities stated that they had a legal obligation to share a portion of that money with the S.C. Bar Foundation, the charitable arm of the S.C. Bar Association.
The new proposal calls for all of the $19 million to go into an account known as a “common fund,” which would initially be used to pay those who were improperly charged the 1.5% levy.
Taken off the top of the $19 million would be about $47,500 for claims administration and related services. That money would go to Myrtle Beach, which is responsible for paying its attorneys out of other sources.
Claims for reimbursement could be made until May 15.
Once that period ends, half of the money left would go to local municipalities and 25% would go to the S.C. Bar Foundation, which funds grants for law-related nonprofits throughout the state. Past grant recipients have included groups that perform legal work for the poor and services for domestic violence survivors, youth education and environmental law.
As part of the settlement, the bar foundation’s allocation would focus on Horry County programs.
A representative for the bar foundation could not be reached for comment.
The final 25% of the settlement would be placed in a separate account for three years. This money would be used if there are any claims to the common fund or challenges to the distribution of the money. After the three years, the money would be returned to the cities.
City and county officials initially declined to discuss the specifics of the settlement, but a joint news release was issued late Friday afternoon after this story was published. Before the release, both sides expressed support for the possibility of a resolution.
“I was very happy when the leaders of Myrtle Beach and Horry County came together to finally agree on a settlement,” North Myrtle Beach Mayor Marilyn Hatley said after her city’s council voted to approve the deal Wednesday. “I commend them for being open-minded and working together for the betterment of all of us. We were all in this together and it just shows what happens when you collectively collaborate together.”
Horry County Council Chairman Johnny Gardner said he hopes finalizing the deal will end some of the hard feelings between the city and the county. He also wants to free up the tens of millions in fee revenues that the county hasn't been able to spend because of the litigation.
“We can now use this money for the budget, which is critically short," he said. "This will not only help Horry County, this will help Myrtle Beach. This will help all the municipalities. This is a good thing."
If a judge approves the settlement, the terms will be outlined in public notices and on a city website. A final hearing on the settlement is tentatively scheduled for April 16.